Citigroup, Lawsuit Settlement | featured news

A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup Inc's proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets.

Citigroup said on Wednesday that it had agreed to pay $590 million to settle a class action lawsuit brought by shareholders who contended that they had been misled about the bank’s exposure to subprime mortgage debt on the eve of the financial crisis.

A federal judge on Monday struck down a $285 million settlement that Citigroup reached with the Securities and Exchange Commission, saying he couldn't tell whether the deal was fair and criticizing regulators for shielding the public from the details of what the firm did wrong.

Wells Fargo agreed to pay $100 million to Citigroup to settle all claims related to its $15-billion deal to acquire Wachovia in the midst of the financial crisis.